Update for Stoney Creek AQUA Customers from Bruce Henderson and Hank Gibb: 10/24/2018

Update for Stoney Creek AQUA Customers from Bruce Henderson and Hank Gibb

1. Earlier this year we were engaged in pushing back against Aqua’s request to the State Corporation
Commission (SCC) for several significant changes to the rate structure. This included:

A. Water and waste water rate increases of 49% and 48% respectively
B. A separate water and waste water infrastructure service charge (WWISC)
C. The elimination of the credit customers can receive for using their portable water meter reading to measure
water going into the ground for outside irrigation and not using the waste water system when they use more
than 3,000 gallons of water monthly
D. Aqua’s push for a unified and consolidated rates system in Virginia whereby all individual water systems
and communities serviced by Aqua would have the same rate structure despite the fact they are not inter-
connected and the individual systems are very different- some relatively modern and simple and in excellent
shape (like ours) while others are plagued with problems, are old and have not been maintained as well as
ours has.

2. On October 19th the SCC issued its final ruling on this case and the results for us are mixed.

A. On the plus side our water and waste water rates will stay the same as they have been and the 3,000 gallon
allowance stands. Also, the outdoor water irrigation credit stands for those Aqua customers using more than
3,000 gallons monthly and reporting to Aqua monthly their outdoor water irrigation usage.

B. On the less than good side, the SCC approved a WWISC for a three year trial period at which time the
WWISC may be ended, expanded or modified. It is not an automatic rate adjustment. They also imposed
very comprehensive and detailed accounting and cost data requirements on Aqua to support the WWISC.
Aqua will be permitted to begin deferral of costs of WWISC eligible investments placed in service after 1
March 2019. Aqua must file with the SCC its annual requests for a WWISC surcharge at least 120 days in
advance of the effective date of the surcharge. The cost of capital used for developing the WWISC revenue
requirement shall incorporate a Return On Common Equity of 9.25%.

Aqua will research and address outdoor water usage in its next base rate application and provide the SCC
and its customers with a summary of the research and rate design implications. Also, AQUA will
re-distribute to all customers the SCC approved customer service complaint procedures due to confusion
among various customers regarding this.

Stay tuned. We will do our best to keep all Aqua customers informed as we move forward

Bruce and Hank